It is payday! Do your payslips comply with the law?

By law, all employers must issue employees with payslips when wages are paid. Naturally employers have many questions – What are the benefits of a payslip?  What information should appear on the payslip?  What deductions can be made?  Are there limits to these deductions?

What are the benefits?

Payslips are a handy tool to assist in managing labour relations and has many benefits for both the employer and employee.  Receiving a payslip also empowers the employee to open an account, apply for a loan and serves as proof of employment.  Benefits for the employer include the following:

  • Saving time and money
    By recording all the necessary information on a payslip, employers save time by not having to explain every aspect of the employee’s wage.  The employer also saves money as every aspect of the employee’s wage and relevant deductions are carefully calculated.  This prevents overpayment, as well as ensuring the necessary deductions are made.
  • Record keeping
    An employee must refer a dispute regarding remuneration to the Department of Labour or the Labour Court within 3 years.  The employer must therefore keep also keep these records for at least the same period.  Payslips keep record of information regarding the following:  
    • Hours worked (ordinary hours, overtime, Sunday time, public holidays and other)
    • Deductions made (statutory, additional and other)
    • Periods of payment
    • Proof of remuneration received
    • Personnel details (address, job description, etc.)
  • Minimising risk
    During an inspection by the Department of Labour, the labour inspector can request copies of employment contracts an payslips.  Up to date payslips not only minimises the risk of disputes and uncertainty between employers and employees, but also ensures that the employer complies with the relevant labour law applicable to the industry.
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What information should appear on payslips?

The following information should appear on every payslip:

  • Employer’s name and address
  • Employee’s name and occupation
  • Period of payment
  • Employee’s wage and wage rate
  • Hours worked – ordinary hours, overtime, Sunday time and hours worked on a public holiday
  • Any other pay arising out of the worker’s employment
  • Deductions
  • Employer’s registration number with the Unemployment Insurance Fund (UIF) and the employee’s contribution
  • Action amount paid to the employee

We advise employers to manage labour risk proactively and also include the following on payslips:

  • Leave taken and available leave
  • Proof of receipt

What deductions can the employer make?

The employer can make the following deductions:

  • Statutory deductions
    Statutory deductions are enforced by legislation and includes UIF and Pay As You Earn (PAYE)
  • Deductions specific to the industry, e.g. where a Bargaining Council is applicable
  • Deductions required by a court order or arbitration award, e.g. family support
  • Other general deductions
    Other general deductions can include loss and damages, loans, provident fund or a pension fund, trade union subscriptions, etc.  It is important to note that deductions for loans are limited to 10% of the employee’s monthly remuneration.  Deductions for loss and damages may not exceed 25% of the employee’s monthly remuneration and is subject to the following:  
    • The loss and damage was due to the employee’s fault and occurred in the course of employment
    • The employer followed a fair procedure

The relationship between the employer and employee is based on mutual benefits and respect.  Clear rules and guidelines ensure friction and misunderstandings are kept to a minimum.  This promotes productivity and a positive working environment.

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LWO Regsadviseur - LWO Legal Advisor

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